The World Bank has counselled Cameroon to reinvent its public sector to reduce distortion in order to become an upper-middle income country, as targeted in its Vision 2035 document.
According to the Bank Cameroon can still meet its emergence plans by 2035 if it anchors its growth strategy towards reinventing the public sector to reduce distortion, promote innovation and increase allocative efficiency and more competitive markets.
The bank opines that various factors like high market concentration, state ownership of big firms, and government regulations hold back competition in Cameroon. To the bank, the country’s limited competitive environment has led to considerable resource misallocation, where more productive firms are 10 times more productive than less productive firms on average.
Going by the bank, achieving its emergence plans means Cameroon will have to increase productivity and unleash the potential of its private sector. “Cameroon’s real GDP must grow by around 8 percent from now until 2035, which in turn will require the investment share of GDP to increase from around 20 percent of GDP to 30 percent of GDP and productivity growth to reach 2 percent over the same period, from its average rate of zero growth over the past decade. These are daunting challenges. Sustaining growth at such rate for more than 20 years was achieved by only few countries: China, Korea, Vietnam, and Botswana. Furthermore, a 2% productivity growth was achieved by only 5 percent of countries over the past 25 years” a statement from the bank read.
However the top financial body has said Cameroon can still realise its plans if the country fosters competitiveness by promoting local regional and global competition, and refocus the state on its core functions of regulation and economic promotion while withdrawing from production.
The bank reiterates more concrete actions from the Cameroon Economic Memorandum which among other things proposes the deregulation of the trucking industry to increase competition to reduce transport prices and enhance quality of services, government withdrawal from production in those sectors where the private sector is already successfully operating, the discontinuation of tax incentives and subsidies to loss-making companies, the discontinuation of public monopolies in contestable markets and adoption of an aggressive FDI attraction strategy targeting multinationals operating in sectors with high potential for job creation and export.